Questions re buying property with other people

by Readers Question

16:51 PM, 18th December 2013
About 7 years ago

Questions re buying property with other people

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Questions re buying property with other people

This is probably fairly simple but I cannot seem to get my head around it.

My wife and I and my inlaws (mother and father) are going to buy a BTL property in the new year. I have 3 questions.

  1. I’m guessing we would need to be tenants in common each owning 25%?
  2. As some of this will be mortgaged would all of us need to be on the mortgage? (Would that even be possible if someone is 60 years old?)
  3. The mortgage part is going to be interest only. As the monthly payments are the same whether we have the mortgage for 5 or 25 years is it always the best choice to go for as long as possible?

Many thanks Questions re buying property with other people

James



Comments

Mark Alexander

17:00 PM, 18th December 2013
About 7 years ago

Hi James

In answer to your questions:-

1) Yes that's definitely one option to consider. You could also own the property as joint tenants or create a Limited company. I recommend you seek professional advice.

2) Everybody on the deeds would also need to be a party to the mortgage, a mortgage deed allows for up to four people. The legal title of the property could be owned by any one of you and the equitable interest could be held in trust for the other three if you wish. This can be organised by any competent conveyancing solicitor. Again I recommend you take professional advice.

3) It always makes sense to take an interest only mortgage over the maximum allowable period as this put you in control, i.e. you decide when you want to repay the mortgage as opposed to the bank holding all the cards. Note that several mortgage lenders will only lend to age 75, hence my suggestion of taking professional advice in respect of point two above.

Please see my latest article linked below.
.

Howard Reuben CeMap CeRER

20:40 PM, 18th December 2013
About 7 years ago

Hi James

BTL mortgages are of course arranged on a 'commercial' basis and the amount you can raise is mostly based on the rental income and not based on earned income (in the way a residential mortgage is calculated).

In addition, because BTL mortgage applications are not occupation based, so the maximum age does not link in with usual retirement dates (again, in the same way a residential mortgage does), so maximum BTL mortgage ages of 75, 80, 85 or even older are not impossible to arrange.

As Mark says, this is an area that requires professional advice to ensure the right financial product is arranged and my business profile link above provides the links to a team of whole of market professional mortgage brokers who cover the whole of the UK.

Hope this helps.

Howard

Jan Martin

21:19 PM, 19th December 2013
About 7 years ago

This needs to be checked out but I believe Mortgage Works will lend to the age of 90 yrs.Woolwich BTL max 25yrs and no max age. Ipswich the same .

22:07 PM, 19th December 2013
About 7 years ago

James,

You have already received some great advice from trusted sources.

My contribution is to urge you to put everything in writing and understand each person's expectations of the arrangement.

Personally, it is my belief that involving family and friends in financial transactions often leads to tears and people falling out.

People can suddenly become very peculiar where money is involved!

If you and your wife can do it on your own, I believe that would be far healthier for all of you. Just saying.

Puzzler

9:49 AM, 20th December 2013
About 7 years ago

You don't give any figures but I would be wondering whether the net rental income after tax when split four ways (or two if between couples) is sufficient to make it worthwhile.


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